What are your thoughts as to the future of so-called cryptocurrencies.

I am not currently participating in this field but to me it seems rather worrying, as I have never before seen a market that offers such a large return on investment, which in my mind can only mean one thing. (this is a huge bubble) [the coins are hugely over valued]

How is a Bitcoin's value determined? As far as I am aware, it's determined by nothing more than what someone else is willing to pay for it.

The fact that it's perceived value is based on the Dollar or other currencies for that matter, means that it's not a currency at all, but an asset (a virtual asset). If actual currency such as the US dollar (Fiat Currency) had to fail and fall away, then how would it's value be determined then, seeing that it's value is based on that of Fiat Currency?

Are you really anonymous when you deal in Bitcoin (I don't know?), as far as I'm aware, the blockchain keeps record of every transaction ever conducted using Bitcoin for ever, so if the receiver of revenue ever received the mandate to audit the blockchain, what would that mean for people who have maid huge capital gain profits via bitcoin?

These are my thought's, what are yours? (Please correct me if I'm wrong in any of my thought's regarding this subject.)

Irinikus wrote:How is a Bitcoin's value determined? As far as I am aware, it's determined by nothing more than what someone else is willing to pay for it.

That's the problem: there's no way to put a value on Bitcoin since it doesn't generate any sort of return, so it all comes down to what people are willing to pay, which currently seems to be based entirely on how much they expect it to rise in the coming weeks. That's a pure asset bubble and when it bursts the price will collapse catastrophically. Not saying Bitcoin is valueless, but it certainly isn't fundamentally worth 20x what it was last year. I wouldn't go near it at these prices. If I had the balls (and if it were possible) I would short it, but there's no telling how much higher it will go.

My coworkers, even the ones who have zero savvy about cryptocurrencies, are all buzzing about it and have been buying-in. These are the same coworkers who pool their money every week to buy lottery tickets. Bitcoin seems to trigger the same sort of endorphin rush for them, and this is no doubt happening with investors around the globe. At a certain point the buying becomes a panic as people rush to get in "before it's too late" - much like the terminal phase of the housing bubble in 2005/2006. That's when the end is near. Thankfully the Bitcoin burst won't collapse the global economy like the housing bust since it's mostly people gambling with their disposable income.

There are a lot of parallels with the 17th century Dutch tulip mania, and supposedly the Bitcoin bubble has now surpassed it as the greatest asset bubble in history.

"buy bitcoin with credit card" has been trending on google, which is about all you need to know.

IIRC CHC had purchased a butterflylabs miner a couple years ago. I ran a gpu miner for a few weeks on the radeon 5770 in my mac pro and could have made enough after the fees and everything to buy a coffee, but I never cashed out. It was nowhere close to a whole bitcoin even then. Probably lost money after paying the electric bill. This was in mid 2013. Ideally you would have been interested pre-2010 to actually make some money in it. Now that the financiers are interested I wouldn't touch it with a 39.5 foot pole.

It has some "real value" as a payment method for the black market but that's about it.

The one good side effect is that I purchased a GTX 1070 from Best Buy in 2016 for $449.99 and was able to sell it a year later for $590 on ebay.

SiliconClassics wrote:Thankfully the Bitcoin burst won't collapse the global economy like the housing bust since it's mostly people gambling with their disposable income.

There is a tremendous amount of natural resources being wasted to produce the hardware and energy necessary for mining. It's not just rich idiots wasting their money.

It's all bottle-caps when you get right down to it. If somebody wants to play around and win some scratch while the bubble is still bubbling, well, more power to 'em, but I don't want to hear anybody wailing when it inevitably bursts.

I really despise these people who act like they're so superior because they hitched themselves to a currency that could completely collapse tomorrow. And it's especially hilarious when they try to say that poor people could bootstrap their way out of poverty with Bitcoin, a currency which requires large quantities of electricity and a good $1000 or so of computer equipment to produce.

I'll stick with US dollars, sure they aren't always worth a whole lot but at least they're real.

Bitcoin crashed today, down from a high near $20,000 last week to a current price around $11,000. No telling where it goes from here but I wouldn't be surprised to see it make a head-and-shoulders top and then drop below $10,000 by early January. Then again, it could recover and rocket up to $30,000 in the same time frame. I'm still not touching it.

Tomorrow I'm meeting with a friend who mined for years and amassed several thousand of them, but sold when the price was still below $1,000. If he'd kept them all he would have had more than $50 million last week. Imagine seeing $25 million of your personal net worth wiped out in a matter of days? Yikes.

Raion-Fox wrote:Cryptocurrency is a hobby, not a replacement for more traditional investments.

The new kids on the block don't know this. They either think this is some hip way to make money (not limited to investing for people on their behalf with a promised return) or they are graduates in economics who think they are hot s*&# and know what they are doing.I would of liked to see a full crash mind you. The last time it went somewhere south the bitcoin subreddit put a suicide hotline at the top of the page. Call me twisted but these are the kind of people we don't need touching real markets.

Irinikus wrote:The fact that it's perceived value is based on the Dollar or other currencies for that matter, means that it's not a currency at all, but an asset (a virtual asset). If actual currency such as the US dollar (Fiat Currency) had to fail and fall away, then how would it's value be determined then, seeing that it's value is based on that of Fiat Currency?

Every currency is (or at least was) the quantisation of the perceived value of an asset. E.g. for one dollar you can buy a certain amount of hamburgers. Once you have more than one currency you need to define how the value of one unit of currency A relates to one unit of currency B. Of course we could base our whole financial system on the value of hamburgers and use this to convert between different currencies. But for reasons of practicability (or financial domination for the tin hats among us) we decided to compare the value of different currencies against the dollar.

So I don't think that basing the value of crypto currencies on US$ is something that should be seen as a reason against crypto coins.

Personally, I think it's a bubble and a very interesting experiment at the same time. We never had a currency before which was solely driven by market forces. So lean back and enjoy the show. There might be some interesting lessons to be learned ... even if we learn how not to do things in the future.

tomvos wrote:So I don't think that basing the value of crypto currencies on US$ is something that should be seen as a reason against crypto coins.

Personally, I think it's a bubble and a very interesting experiment at the same time. We never had a currency before which was solely driven by market forces. So lean back and enjoy the show. There might be some interesting lessons to be learned ... even if we learn how not to do things in the future.

I agree with you completely, it's really going to be interesting to see how this ends. (I would just hate to be the last poor person to buy a Bitcoin when the high point is reached)

You cannot draw more energy from a system than you put into that system.

People (those who got in early) are only making money out of Bitcoin because others are buying into it. "Profits" are only being made by the few, because further down the line many others will loose. (there is finite amount of value in this system, as Bitcoin isn't producing anything to increase it's own value, such as shares in a business that actually produce goods)

Pure speculation!

Don't get me wrong, some form of cryptocurrency will in all probability be our global means of trade in the future (an appropriately regulated system), but what we're seeing currently is pure madness! (Almost like Black Friday in the US! Pure comedy!)

Irinikus wrote:You cannot draw more energy from a system than you put into that system.

People (those who got in early) are only making money out of Bitcoin because others are buying into it. "Profits" are only being made by the few, because further down the line many others will loose. (there is finite amount of value in this system, as Bitcoin isn't producing anything to increase it's own value, such as shares in a business that actually produce goods)

This is the key, right here. The only demand for Bitcoin* is people buying into the market in hopes that they can convince other people to pay them more for the same thing later. Eventually that's going to stop looking like a winning proposition to potential newcomers, and then the real fun starts.